Emmanuel OchayiNigeria’s economic landscape faces fresh turmoil as the country’s foreign exchange reserves hit a bleak low, recording $32.87 billion at December’s close, marking a six-year nadir.
The data, revealed via the Central Bank of Nigeria’s website, signals a concerning trend, indicating a decline from its peak of $47.63 billion in June 2018.
The depleted reserves underscore the persistent battle waged by the Central Bank to stabilize the faltering naira, which has faced an alarming depreciation of over 50% this year alone.
The currency’s struggle was further compounded by the unification of the foreign exchange market in June, positioning it as the third worst-performing global currency.
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“Faced with a turbulent year, the naira grapples with a backlog of unresolved forwards, unmet commitments of dollar inflows, and a daunting two-decade high in inflation,” remarked Kyle Chapman, an FX markets analyst at London-based Ballinger & Co., in a statement to Reuters.
The pressure on the naira escalated due to several factors, including an estimated $7 billion FX backlog highlighted by CBN Governor Yemi Cardoso, diminishing foreign capital, and dwindling FX earnings from oil sales.
Despite the Central Bank’s pledge to resolve FX backlogs swiftly, the actual progress appears limited. The naira’s decline persisted, registering a new low of N1,043.09/$ on the official window, according to the naira metrics daily exchange rate tracker.
FMCG multinational PZ Cussons disclosed partial cash repatriation from Nigeria but expects full completion of the process by the end of FY 2024. The Minister of Finance had earlier forecasted an influx of around $10 billion in foreign exchange, yet this projection remains unrealized.
These developments cast shadows over Nigeria’s economic recovery, raising concerns about the naira’s stability and the nation’s financial prospects amid ongoing challenges.
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